A qualified trust beneficiary is a trust that satisfies the requirements so as to be treated as a designated beneficiary. For retirement accounts inherited before 2020, the life-expectancy of the oldest trust beneficiary’s would be used for life-expectancy distributions. For retirement accounts inherited after 2020, the 10-year rule would apply to a trust that is designated beneficiary, and the life-expectancy option would be available only if the trust is an eligible designated beneficiary.
A trust is a qualified trust if it meets the following requirements:
- The trust is a valid trust under state law, or would be but for the fact that there is no corpus.
- The trust is irrevocable or will, by its terms, become irrevocable upon the death of the employee.
- The beneficiaries of the trust who are beneficiaries with respect to the trust’s interest in the employee’s benefit are identifiable
- The trust documentation, showing the designated beneficiary as of September 30 of the year follow the year of death, has been provided to the plan administrator or IRA custodian/trustee by October 31 of the year following the year-of -death. There must be an agreement to provide the IRA custodian/plan trustee of any future amendment made to the trust. The documentation may be a list of the trust beneficiaries of a copy of the trust.
The documentation requirements for a trust to be a qualified see-through trust for beneficiary distribution purposes the trustee of the trust must provide a list of beneficiaries or a copy of the trust instrument to the plan trustee/IRA custodian by October 31 of the calendar year immediately following the calendar year in which the participant died.
If providing a list of beneficiaries, the trustee must:
- Provide the plan administrator or IRA custodian with a final list of all beneficiaries of the trust as of September 30 of the calendar year following the calendar year of the death (including contingent beneficiaries) with a description of the conditions on their entitlement sufficient to establish who are the beneficiaries.
- Certify that, to the best of the trustee’s knowledge, this list is correct and complete and that the requirements for the trust to be a qualified see-through trust are satisfied; and
- Agree to provide a copy of the trust instrument to the plan administrator/IRA custodian upon request.
If providing a copy of the trust, the trustee must provide the plan administrator with a copy of the actual trust document for the trust that is named as a beneficiary as of the participant’s date of death.
Treas. Reg. §1.401(a)(9)-4, Q&A-5
Additional Helpful Information
- If the spouse of the participant is the sole beneficiary of the trust, the participant may apply the RMD calculations rules that would apply had the spouse been the direct beneficiary